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tv   Nightly Business Report  PBS  August 23, 2017 5:00pm-5:31pm PDT

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. this is nightly business report with tiny mathison and sue sue rivera. >> the angst from yesterday did not carry through to today. walmart and google are coming together. a challenge to amazon and how we shop. lotterymania. haven't bought a powerball ticket yet? there are 700 million reasons why you might want to. this is our nightly business report for august 23rd. good evening, everyone, and welcome. stocks fizzle after yesterday's
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sizzle. it may have been due in part to comments made last night by the president. he says he's ready to shut down the government unless congress passes funding for a border wall with mexico. one analyst called the comments unsettli tt n that they're not good for the investing environment. the deadline to pass a spending moisture is at the end of next month, while at the same time lawmakers face a deadline to raise the nation's debt limit. that's a much more serious issue for the market. today the agency said the country's aaa rating is at risk. the dow is down to 28,812, the nasdaq lost 19,000, the s&p lost 8. attention today also turned to jackson hole, wyoming where central bankers are getting ready to meet later this week. and the gathering comes at a critical time for investors.
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we explain. >> reporter: it was a quiet day, but the trading action could pick up later this week when the federal reserve meets with global central bankers for their annual jackson hole symposium. the focus will be on fed chair janet yellen, mario dragy on friday. while we've been told to expect no surprises from dragy, they will unwind a timetable for the ucc's tibuying program. the two banks have been at a big issue for a while now on where the central banks are going now. it also ends an era of easy money and possibly, possibly janet yellen's tenure as the fed chair. the feds face a dilemma right now, because even though the unemployment rate is at a 16-year low, inflation is barely budging. if yellen expresses any bit of confidence that inflation will pick up in the next few months,
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despite the energy and retail prices, the market could be in for a little bit of a surprise. bill dudley, who is a close ally of yellen, said just last week that he still favors a third rate hike this year and expects to see firmer wage gains push inflation up toward the feds' 2% objective. the other big question mark is the possibility of a u.s. government shutdown. president donald trump's comment about building a wall even if it means shutting the government down clearly has the market on edge today, but could that make the feds put the market on hold? they're putting the odds at a september rate hike at 40%. >> so with central bankers meeting later this week, should you now shift your attention away from washington to the fed and the economy? michael, founder of ceo debt management, talks to us about
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that. good to see you, michael. as always, welcome back. >> sue, good to see you. >> i think one of the problems of trying to shift away from washington is some of the things the president brought up are so very important to wall street, like the debt limit, like the government shutdown and the like. how do you make that pivot from washington to the fed? >> so here's the question. if you think about it from an investment standpoint, if there is a government shutdown, let's just say, for example, there is a government shutdown, how long do we really think that's going to last? do we think it's going to last a day, an hour, a month? i think it's going to be very short term, if at all. and i think that's what investors right now are starting to focus on which is, yes, a shutdown might occur for a day or three hours, but in the end, interest rates are low, the tenure treasury is below 2.2% at this point. we have reasonable earnings numbers. so i think investors really are focusing more on economic fundamentals. >> let's turn to the debates that will take place this
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weekend -- or later this week at jackson hole. the "wall street journal" had a story this morning, this is one of the rare times in recent history that virtually all the major economies around the world are doing well at the same time. have the central bankers mostly got it right? should they just leave things the way they're doing them now? >> well, you know, from our view, tyler, yes, they should. i still think the economy, even though the u.s. economy is doing better, i don't think things are great. and as you correctly point out, many economies around the world are doing fairly well. but i think it's really very fragile, particularly given the geopolitical situations we face from a terror standpoint, issues related to dislocation and technology in terms of how it's changing industries. i think at this point it's probably wise they stay on a course where they're less aggressive in terms of raising rates as most people thought they would do 6 to 12 months ago. >> so what does that mean for stock markets, not only around
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the world, but for our stock market in particular? because some of those external events tend to whip our stocks. overall the market has been doing extremely well. >> i just got off the phone with someone just an hour ago asking me that exact same question, which is what do we do if, for example, the markets have a swoon because of some political news, maybe a government shutdown? if you're buying assets in the market and there's a swoon, there is still a destruction in the stocks, but there is opportunity out there. i would look at dips in the market. people say this, but it's really true. dips in the market is a buying opportunity. >> on that note, michael, thank you very much. well, the housing market stumbled just a bit today. new home sales unexpectedly fell in july. a 7-month low even as prices
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surged and that is raising concerns that the housing recovery could be slowing. ann olie takes a look. >> reporter: newly built homes are more expensive than ever before. they're also more expensive when compared to similarly existing homes than they've ever been before. that is why sales are suffering, dropping about 9% in july compared to june and compared to july of last year, according to the u.s. census. they are simply out of reach for too many potential buyers. it is even more apparent in a simple map. sales fell more in the northeast where homes are more expensive. >> people are going where homes aren't as affordable. >> the price of a newly built home jumped to $713,000. it is the highest price on record. affordability is clearly rearing its head here.
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you shouldn't be seeing both price and supply rise together. existing home supply sex tropical storm hermi extremely weak and builders should benefit from that. but on the other end, builders say they can't afford to put up homes due to construction costs. similarly existing homes, historically are about 10 to 20% more. but in the last six years, that premium has more than doubled. >> maybe builders have misjudged the market and priced at a little higher rate. i think people are holding back a little bit. >> but if builders don't bring their prices down soon, they may see their how'suses sit unsold. the recent boom did not help homes in the most recent quarter. it warned of slowing growth and profit margins, this as it spends more on marketing and
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staffing. lo lowes plans to increase employment times. it is a disappointing outlook and that sent shares lower. google joining forces, to take down amazon. starting next month, shoppers will be able to order using google's alexa. it is among the growing use of shopping devices. courtney reagan has more. >> reporter: watch out, amazon, alexa is getting more competition as two big companies team up. people will be able to place walmart orders for hundreds of thousands of items by using only their voice. while google already partners with about 40 retailers like target, costco and whole foods, walmart is the first to offer linking your personal account history with google's home
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assistance, allowing shoppers to simply order detergent, prompting the assistant to order tide plus febreze, 92 ounces, based on what you purchased before instead of guessing. which is why walmart e-commerce ceo says reordering is one of the best features. however, the alexa assistant already has the talent of your previous history. >> it is clear that amazon is the leader of retail, and now you have walmart aggressive in becoming more innovative than amazon. it's gone to kind of one person leading the pack to a two-horse race. >> reporter: only about 11% of americans use a voice-activated assistant one time or more a month right now. but of those that do, more than 70% are talking to amazon's alexa. less than a quarter are talking to google. >> in the foreseeable future,
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you'll see more voice ordering and that may be the new mobile as you go down the next five to ten years. >> reporter: i asked walwalmart ceo how accurate the voice ordering is. he said it's sketchy, but as it continues to get better, i do see this as a primary way for consumers to shop in most cases. while walmart will get the benefit of being the first to order history with google, brian elliott tells me there is nothing preventing other retailers from doing the same, even, he says, if amazon wanted to be an order option on google home. for nightly business report, i'm courtney reagan. >> amazon's proposed takeover of whole foods took another step forward. shareholders approved the near $14 billion deal. regulators also cleared the merger saying it does not need further anti-trust scrutiny.
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both hope to close the deal before the end of the year. the takeover is the biggest retail merger so far this year, and it would be the third largest since 1995. amazon is one of the reason why the world's biggest ad agency is cutting its revenue forecast. wpco says some of its clients, mainly packaged good companies, are coming under pressure from companies like amazon. many packaged companies have big budgets which are starting to cut. >> i think there are three forces at work here. first is digital disruption which is not a threat to the industry. it's an opportunity more than a threat. the second thing is activist investors taking positions particularly in packaged goods companies which put them under short-term pressure, and the third force here is the zero-based budgeters who, again, using low kacapital money have
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started to acquire companies, putting them on impression. >> amazon fell to 11% in trading today. still to come, big rigs are going high tech. >> we're going to be getting inside this truck as it transports 2,000 cases of budweiser. we're looking at technology and how it is transforming this $700 billion trucking industry. that's coming up on "nightly business report." a new report finds collision
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systems are drastically cutting collisions. lane departure warnings are lowering rates of single vehicle sideswi si and head-on crashes by roughly 10%. also cut injury crashes by 20%. there were 25% fewer accidents in 2015. an app is helping to match empty trucks with freight that needs to be hauled so goods can be moved from place to place more efficiently. morgan brennan takes a look at the trucking industry's uberization in the industry. >> reporter: william lugo has been hauling freight with his own semi for 24 years. six months ago he started to use an app on his smartphone to find shipments needed on a truck. >> a lot of down time before this. now technology makes it a lot
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easier for loading, unloading. >> reporter: call it the uberization of trucking. a technological shift two dozen years in the making that's shaking up the trucking industry. using apps running on the cloud powered by algorithms published by a shipper at a reasonable rate. this was used by convoy. the app connected lugo with anheuser busch who needed to move 2,000 cases of budweiser to its distribution building in the bronx. they say this is making things more efficient. >> we can learn more about our business. for example, we can see the truck as it evolves and delivers along a map along its route to
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delivery. >> reporter: this represents a big change in how truckers are brokered, a business that has always relied on people, relationships, the phone, even fax machines to match freight to trucks. convoy isn't alone. uber launched a service earlier this year. amazon is exploring the space, and other startups include load-up and transfix, which he uses. but they've been investing in new technology as well. c.h. robinson, for example, has launched two apps since 2011. analysts say competition is high and the barrier to entry even higher. >> if you don't have the customers right now, and you don't have the carriers, you're going to need to either pay the truckers more or charge the customer less, squeezing your own margin to try to build density in the network. >> reporter: but whether it's a newcomer or industry stalwart,
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the uberization means more transport for shippers and more money. >> i'm seeing more production for the company and a lot more money. this is going great for my business. >> reporter: for "nightly business report," i'm morgan brennan in newark, new jersey. >> the trucking industry may be getting uberized, but the trucking funds override the savings. it may hurt business. according to portfolio holdings, vanguard, hartford and t.r. price have overcut their investment by as much as 50%. uber is currently looking for a new ceo. since uber is a private company, its formalization rate changes for investors. they are used as proxies in investment sentiment. american eagle shares soar.
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the teen clothing retail reported higher revenue helped in part by the company's strong area brand. the sales also beats street estimates. shares rows nearly 8% to 1208. revenues at top expectations. suggested profit was better than expected as well. the company also said it's making efforts to drive more traffic to its stores. the shares soared 19% to $6.56. the medical device striker cut its earnings for the full year after saying it was voluntarily recalling some of its oral care products due to cross-contamination concerns. striker says it has discontinued business with the third party seller that made those products. the company said it expects to resume shipment of the merchandise next month. shares fell nearly 5% to 138.36. chrysler may consider spinning off luxury car brands
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maserati and alpha romeo. the two brands combined are worth more than $8 billion. chrysler shares up 7% to 1742. la-z-boy continued to fall after the chair retailer reported disappointing results after the bell yesterday. the gains seen in the latest quarter came mostly from acquisition, not from expansion in its most popular division. today la-z-boy said it was in talks with amazon regarding distribution opportunities with that e-commerce giant. la-z-boy reclining just a bit today, plunging from 28% to 24.55. sonoma stronger than normal gains and a look at quarter earnings also cleared street targets. shares rows in the extended
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session and they rose at 4340. samsung found itself in the spotlight. the company rolled out the newest version of its flagship smartphone. they had an exploding battery last year. as reported from new york, it's samsung's reputation that's on the line. >> reporter: this launch is seen as samsung's redemption moment. yes, samsung made the screen bigger. and the new gallaxy note 8 has two cameras. but it's more than about a new smartphone. last year's recall of the galaxy note 7 was a black eye for the company. exploding phones went viral, losing the company $8 billion. now samsung is hoping to extinguish those fears with one of the largest devices on the
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market. >> i think it's a very sexy phone. i think it's a good rebirth of the note brand. samsung has figured out a way to make larger and larger screen devices without making the device really large. they kind of invented the category because everyone laughed at large phones beforehand, and they stumbled terribly last year. >> reporter: but one of samsung's biggest challenges is whether it can stand out against its competitors. >> i am going to hold out for the iphone 8 or 7-plus. i like to see what's out there before i make a decision. >> reporter: both tech giants continue to face pressure from their counterparts in china. >> apple and samsung have been competing at the high end against surging chinese for several years now. i don't think that's anything new. >> reporter: according to the latest data from gartner, both lost shares in the first quarter
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of the year, making this launch a test for the future of samsung's entire new line. coming up, hitting the jackpot. >> the chances of winning are so astronomically low. so why would anybody come outside in august and stand in line? there are 700 million good reasons. i'm contessa brewer. we have more on the mega powerball ahead, on the "nightly business report." american express admitted offering worst credit card terms to countries like puerto rico and other territories in the 50
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states. it charged more and offered less than attractive rebates. as a result, the company agreed to pay a fine of $96 mi,000. they said their actions harmed customers between 2009 and 2015. roughly $700 million is the jackpot and that's a big number to wrap your head around. even though the odds of winning are small, someone has to hit the jackpot eventually, right? contessa brewer has lottomania in new york city. >> reporter: at jeremy's ale house, the beer comes in styrofoam cups and the powerball is self served. in a dive bar in one of new york's oldest neighborhoods, the food is cheap and the dream is worth millions. what are you going to do with
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700 million bucks? >> i have tons of friends, tons of family. i'm going to spread it around and everybody is going to have a little bit of joy. >> reporter: but talk about a long shot. >> take a long vacation and take my whole family with me. >> with this money i'm going to have a lot of girlfriends, straight up. a lot. and my money is going to go a long way. >> reporter: the chances of winning are 1 in 290 million, and they don't improve just because the jackpot is a gar gant with an 700 million dollars, the largest in history. if it seems like we're seeinge we are. there are now 69 balls in the bin. there used to be 59. it makes it tougher to get all the numbers. people don't win, the pot gets bigger week after week. >> the higher jackpots drive
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greater interest and greater sales, and that includes more sales -- more revenues for the good causes. it also includes foot traffic for the stores. >> reporter: the change means more revenue for powerball, and the states that participate, an additional $210 billion for the last ten years. it also puts extra money in the pockets of the retailers who sell the tickets. bobby runs a news stand. on big jackpot days, it adds up fast. >> about 50% more business. >> reporter: so you stay busy all day long? >> that's right. >> reporter: how much do you think you might make off a busy day like this selling lottery tickets? >> i make 300 to 400 for my commission. >> reporter: but even skeptics join him when a massive jackpot is on the line. do you usually play the lottery?
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>> no. actually, i don't. >> reporter: do you play, too? your shirt says it all, right? >> it can happen for me, too. >> reporter: perhaps today the dream alone is a cure for what ales you. contessa brewer, new york city. >> do you have your ticket? >> i do not. >> i thought you were going to get it last night. >> i was but i forgot. 700 million reasons i got to go. i'm contessa brewer. thanks for joining us. >> everyone have a good evening. we'll see you tomorrow.
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